Accurate Business Orientation without Blind Follow-Suit

Transformation to smart technology at bank outlets is accelerating currently.  According to data released by Center Daily News recently, increase of number of physical outlets and counter staff of a number of banks slowed down, or even the absolute number thereof reduced. At the same time, self-service terminals and smart counters at the banks are increasing.

As known from industrial insiders, smart technology has become an epitome and breakthrough of transformation in banks, which reflects in the following aspects: on one hand, outlets with poor efficiency have been removed; on the other hand, the previously huge network of outlets is becoming small-scale and intelligent.

Number of Physical Counters Staff vs. Number of Smart Counters

According to data released by Center Daily News, outlets of the five state-owned major banks reduced by 162 in the first half of 2017, and counter staff at downstream reduced by 27,104 persons. Though number of outlets in joint-equity banks is still growing, number of their counter staff is also cut down largely. As shown in semi-annual reports of China CITIC Bank, China Everbright Bank, Ping An Bank and China Merchants Bank, they have shrank their staff in the first half of 2017 respectively by 1458, 915, 5164 and 144 persons, majority of which are counter staff at downstream outlets. As known, layoff often occurred in state-owned banks in the past.

As explained in report of China CITIC Bank, layoff mostly involved in operating staff at outlets. During the report, area of newly built outlets dropped from 1,000~1,500 sq.m. before 2014 to 500~800, and 1,832 operating staff at outlets were cut down by collecting business upstream and adjusting supporting services at outlets.

Compared to layoff, number of self-service terminals and smart counters at the banks are growing continually. By the end of June of this year, 97,717 self-service terminals have been operated at outlets of CCB, 183 up to the end of last year, and 28,568 self-service outlets have been put into operation, with 696 increased. 11,245 smart terminals have been operated at outlets of BOC, growing by 4344.66% over 253 at the end of last year. ABC also made efforts to promote transformation to standard management of outlets and smart technology. By the end of June, 36,000 "super terminals" have been operated at its outlets, covering 90% of its physical outlets.  

Advancement with a Number of Factors

To meet growth of financial technologies, a number of banks expressed that they would make efforts to promote transformation to standard outlet management and smart technology. For example, in recent years, ICBC has promoted intelligent service model of "smart manpower + smart equipment" in their outlets, and worked to elevate service capacity of their outlets and customers' service experience. ICBC expressed that, as estimated, all outlets of ICBC in China will apply smart service within 2017.

As reported by ABC, by the end of June of 2017, the ratio of transformation to standard outlet management has been 71%.  

Since the second half of 2016, transformation and upgrade of retail business of Ping An Bank have been ongoing and transformation to smart retail banking has been promoted overall to set up a retail banking service system of "SAT (society, mobile application, and remote service) + smart outlet".

Banks' transformation to smart technology is promoted by a number of factors. As reported by industrial insiders, from the perspective of internal development strategy of banks, the goals of smart outlets are: 1) cut down costs; 2) increase efficiency; and 3) improve customer’s experience. Overall performance of banks is decided by whether effective return is achieved by outlets as the most valued channel resources of banks. Furthermore, grown of rental of outlets and manpower costs, and passive increase of hardware maintenance cost and investment in equipment update in competition further impairs profitability of outlets. Increasing overall RIO of outlet channel and operational efficiency of outlets has become a focus to banks.

Dong Ximiao, s senior fellow with Chongyang Finance Research Institute of Renmin University of China, expressed that, layout, function, efficiency and service capacity of outlets has direct relationship with competitive force of banks, and influence and core competitive force of a commercial bank in a region is decided by the competitive force of its outlets in the region. Advantages of outlets in business competition relies, on one hand, on strategic execution capacity, professional skill, service capacity and marketing capacity of channel staff, which are specific reflection of staff competence; on the other hand, on transformation of outlets, enhancement of overall channel capacity, optimization of management mechanism and support of middle-/back-end management systems such as technology.

As noticed by reporter, in the term of policies, New-Generation Artificial Intelligence Development Plan (the "Plan") has been issued by the State Council recently, and artificial intelligence has been put to national agenda from industrial agenda. In intelligent finance, it is proposed in the Plan to set up financial big data system and elevate financial multi-media Data processing and understanding capacity. To provide innovative intelligent financial products and services, develop new financial trends and to lift development of intelligent finance to an elevation of national strategy.

Still in Primary Stage

With regard to future of transformation of banks, Mr. Dong thought that, the final goal of intelligent transformation and upgrade is to have a real intelligent "brain". "In current stage, commercial banks may consider the following three strategies in promoting intelligent transformation and upgrade: 1) make best use of the advantages and bypass the disadvantages in construction of smart outlets; 2) optimize process by integrating and applying intelligence in processes; and 3) make good use of technologies such as big data, cloud computation and artificial intelligence." expressed Mr. Dong, the focus of intelligent outlets is fusion of "online and offline business", as well as accurate customer orientation and layering while performing intelligent upgrade and reconstruction.

As expressed by industrial insiders, though some banks in China are performing reconstruction to intelligent outlets, as a whole, domestic banks are still in primary stage for trial. And some banks are in poor planning of investment for intelligent transformation on a basis of "purpose-to-purpose", deviating from the initial intention of intelligent technology. Therefore, investment in intelligent transformation must take into consideration their customer structure and business orientation, instead of blind follow-suit.